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Analog Devices Inc  (NAS:ADI) Interest Coverage: 2.67 (As of Jul. 2017)

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense. Analog Devices Inc's Operating Income for the three months ended in Jul. 2017 was $195 Mil. Analog Devices Inc's Interest Expense for the three months ended in Jul. 2017 was $-73 Mil. Analog Devices Inc's interest coverage for the quarter that ended in Jul. 2017 was 2.67. The higher the ratio, the stronger the company's financial strength is.

NAS:ADI' s Interest Coverage Range Over the Past 10 Years
Min: 4.26   Max: No Debt
Current: 4.26


NAS:ADI's Interest Coverage is ranked lower than
85% of the 667 Companies
in the Global industry.

( Industry Median: 55.34 vs. NAS:ADI: 4.26 )

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Analog Devices Inc Annual Data

Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 Oct13 Oct14 Oct15 Oct16
Interest Coverage Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 31.19 27.79 21.63 30.74 11.58

Analog Devices Inc Quarterly Data

Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17
Interest Coverage Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 14.54 9.21 6.25 2.04 2.67

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

If Interest Expense is negative and Operating Income is positive, then

Interest Coverage=-1*Operating Income/Interest Expense

Else if Interest Expense is negative and Operating Income is negative, then

The company did not have earnings to cover the interest expense.

Else if Interest Expense is 0 and Long-Term Debt & Capital Lease Obligation is 0, then

The company had no debt.


Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Analog Devices Inc's Interest Coverage for the fiscal year that ended in Oct. 2016 is calculated as

Here, for the fiscal year that ended in Oct. 2016, Analog Devices Inc's Interest Expense was $-89 Mil. Its Operating Income was $1,028 Mil. And its Long-Term Debt & Capital Lease Obligation was $1,732 Mil.

Interest Coverage=-1*Operating Income (A: Oct. 2016 )/Interest Expense (A: Oct. 2016 )
=-1*1028.112/-88.757
=11.58

Analog Devices Inc's Interest Coverage for the quarter that ended in Jul. 2017 is calculated as

Here, for the three months ended in Jul. 2017, Analog Devices Inc's Interest Expense was $-73 Mil. Its Operating Income was $195 Mil. And its Long-Term Debt & Capital Lease Obligation was $8,199 Mil.

Interest Coverage=-1*Operating Income (Q: Jul. 2017 )/Interest Expense (Q: Jul. 2017 )
=-1*194.821/-73.073
=2.67

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

The higher the ratio, the stronger the company's Financial Strength is.


Explanation

Ben Graham requires that a company has a minimum interest coverage of 5 with the companies he invested. If the interest coverage is less than 2, the company is burdened by debt. Any business slow or recession may drag the company into a situation where it cannot pay the interest on its debt.

Interest Coverage is an important factor when GuruFocus ranks a company's overage Financial Strength .


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